CHAPTER 7: PRODUCT STRATEGY AND NEW-PRODUCT DEVELOPMENT PowerPoint Presentation

CHAPTER 7: PRODUCT STRATEGY AND NEW-PRODUCT DEVELOPMENT PowerPoint Presentation

2018-12-04 1K 1 0 0

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Part 3: Develop the Value Offering—The Product Experience. McGraw-Hill . Education. 1. Copyright © McGraw-Hill Education.  All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.. ID: 735500

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Presentations text content in CHAPTER 7: PRODUCT STRATEGY AND NEW-PRODUCT DEVELOPMENT

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CHAPTER 7:PRODUCT STRATEGY AND NEW-PRODUCT DEVELOPMENT

Part 3: Develop the Value Offering—The Product Experience

McGraw-Hill Education

1

Copyright © McGraw-Hill Education.  All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

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LEARNING OBJECTIVESUnderstand the essential role of the product experience in marketing

Define the characteristics of a product Recognize how product strategies evolve from one product to many productsUnderstand the life of a product and how product strategies change over time

Recognize the importance of new-product development to long-term successUnderstand the new product development processIdentify how new products become diffused in a market

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Product Characteristics A product

is anything that delivers value to satisfy a need or want and includes physical merchandise, services, events, people, places, organizations, information, or ideas.

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Product CharacteristicsDefining the ProductEssential Benefit is the fundamental need met by the product (getting from point A to point B on an Southwest Airlines)

Core Product is the physical, tangible elements. (One kind of aircraft, low fares, good website)Enhanced Product includes additional features, designs, and innovation that exceed expectations. (Frequent flyer program, fun and entertaining flight attendants)

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Four Products and Their Essential Benefits

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Defining the Product at Southwest Airlines

EXHIBIT 7.2

Enhanced Product

Experiences exceed minimum expectations

Frequent flyer programs

Reserved seating

Core Product

On time

Safe

Experience matches expectations

Essential Benefit

Moving from Point

A to Point B

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Product ClassificationsTangibility – physical aspects of the product experience

Durability – product usage

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Product ClassificationsConsumer Goods

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Product ClassificationsBusiness Goods

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Product Discrimination: Create a Point of Differentiation

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Product Plan: Moving from One Product to Many ProductsProduct Line: A group of products linked through usage, customer profile, price points, and distribution channels or needs satisfaction

Product Mix: all the products offered by a company

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Product Decisions Affect other Marketing Mix ElementsPricingIndividual product pricing within the product line

“good, better, best” product line strategyTechnology companies face special challenges as newer models have better features and lower pricesMarketing Communications

Focus on a single product or the brand?Allocation of budget: Most popular products? Entire line? New products?

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BUILDING THE PRODUCT EXPERIENCE

Product Life CycleProduct Life Cycle Sales Revenue and Profitability

Product Life Cycle TimelineProduct Life Cycle Caveats

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The Product Life Cycle

EXHIBIT 7.12

Reprinted from Roger

Kerin

, Steven Hartley and William

Rudelius

, Marketing 9E, 2009.

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Product Life CycleIntroduction Phase

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Product Life CycleGrowth Phase

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Product Life CycleMaturity PhasePhase defined by the sales growth of the product category

Relative Market Expansion

Market StabilityMarket Deterioration

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Product Life CycleMaturity Phase

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Product Life CycleDecline Phase

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New Products DefinedCompany PerspectiveNew-to-the-World Disruptive Innovation are so innovative they create a fundamental change in the marketplace. Ex. Cell phones, tablets

Sustaining Innovations are newer, better faster versions of existing products or additions to existing product lines. Ex. Diet Coke, Coke ZeroReposition Existing Products

Add new market segments Ex. Cell phones from business usage to adults to teensCost ReductionIntroduce lower cost products with fewer features or scaled back warranty or service

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New Products DefinedCustomer’s PerspectiveThe customer’s perspective is much more narrow and self directed.

The customer is most interested in an answer to the fundamental question—is this new product new to me?First purchase of a cell phone , house or auto can be a intimidating experience

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Why do Products Fail?22

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New Product Development ProcessThe three major activities in new product development are:

Identify Product Opportunities

Define the Product OpportunityDevelop the Product Opportunity

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Identify Product Opportunities24

Generate New Ideas

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Screen and Evaluate IdeasGo-to-Market MistakeFirm fails to keep a bad product idea from moving into product developmentStop-to-Market Mistake

A good idea is eliminated prematurely

25Identify Product Opportunities

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Identify Product OpportunitiesScreen and Evaluate Ideas

Prioritize ideas that pass initial screening and evaluationTime to market (how long will it take to develop and get the product to market).ROI (what is the expected return for the dollars invested in the project).

New product fit with overall company product portfolio.26

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Define the Product OpportunityDefine the Product Opportunity

Define and test the product ideaCreate a marketing strategyAnalyze the product’s business case

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Define the Product OpportunityDefine and Test the Product ConceptProduct Definition Objectives

Define the value propositionIdentify the target market and purchase frequencyDelineate the product characteristics Look, feel, physical characteristics, features

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Define the Product OpportunityCreate the Marketing Strategy

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Budget

Promotion

Place

Price

Product

Target

Market

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Define the Product OpportunityDefine the Product OpportunityConduct Business Case Analysis

Total DemandNew purchasesRepeat purchasesReplacement purchases

Profitability AnalysisLong and short term analysis30

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Define the Product OpportunityDefine the Product OpportunityConduct Business Case Analysis

Total DemandNew purchasesRepeat purchasesReplacement purchases

Profitability Analysis31

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Develop the Product OpportunityDevelop the Product OpportunityDevelop The Product

Product Testing: alpha and betaTest the MarketConsumer Product Market Tests Business Product Market Tests

Product Launch32

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CONSUMER ADOPTION AND DIFFUSION PROCESSConsumer Product Adoption ProcessInnovation diffusion process

is how long it takes a product to move from first purchase to last purchase (the last set of users to adopt the product).An individual moves through five stages before adopting a product.

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The Diffusion of Innovations34


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